Rosfinmonitoring will take part in working out the FATF report to G20 Ministers of Finance on the consequences of the global financial and economic crisis for the international anti-money laundering and counter-terrorist financing (AML/CFT) system. The report is to be presented in this September.
The report will focus on the following issues:
1. Enhancing international AML/CFT cooperation, including mutual work on identifying uncooperative and high-risk jurisdictions;
2. Transparency in the financial system as a core principle for the implementation of the FATF standards;
3. New risks of misuse of financial sector for the purposes of money laundering and terrorist financing under conditions of financial instability.
According to FATF, under conditions of financial instability the common feature of the economies worldwide is movement of illegal ML/FT schemes from the financial sector, where credit institutions are paying special attention to customer due diligence and risks identification, to the less monitored non-financial sector.
The participants of the FATF Plenary session, held in Lyon, France on June 22-26, noted the following high-risk zones:
- football sector accumulating large investments;
- securities sector;
- money remittance businesses;
- free trade zones;
- new payment methods (including prepaid debit cards, internet payment systems, mobile payment services etc.)
As a result of the research recommendations for the private sector will be drafted on the most efficient method of implementing FATF standards and actions against misuse of financial and non-financial institutions.
An active part in distributing these recommendations to the different regions of the world will take FATF Style Regional Bodies, including the Eurasian Group on combating money laundering and financing of terrorism (EAG), whose members are Russia, Belarus, Kazakhstan, Kyrgyzstan, Tadzhikistan, Uzbekistan and China.
According to the State-Secretary-Deputy Head of Rosfinmonitoring Nikolay Varlamov, who took part in FATF Plenary meeting, EAG has a continues dialog with the private sector of the region. For the last six months within the FATF initiative a number of consultations with the private sector has been held. As a result relevant recommendations were drawn up (available on the EAG web-site:www.eurasiangroup.org ). “These recommendations, worked out as a result of interaction between the banking and non-financial community, supervisory bodies, financial intelligence units of the region and seasoned international experts in this field, allow the private sector of the Eurasian region to know the key tendencies of the international and regional financial and economic system and timely identify and minimize the risks”, - noted N.Varlamov. He pointed out that the EAG work on this issue was of high practical value and was appreciated by the FATF management.
The latest consultations with the private sector were held in the framework of the EAG 10-th Plenary meeting in June 2009. They were held in a form of trilateral consultations between the Russian Federation, China and India. As a result the following recommendations were worked out:
1. Lately foreign trade transactions seem to face increased risks associated with consumer goods smuggling. Therefore, it is recommended to strengthen internal interagency coordination, including its international aspect.
2. Under conditions of financial instability it is recommended to advise the financial institutions to enhance monitoring over movement of cash and detection of transfers of large amounts into accounts of companies registered in off-shore areas.
3. There is a stable trend in moving funds from the clearing settlements system into less controlled hand-to-hand circulation, especially into the extra-bank crediting and non-financial services. It is recommended to intensify the information sharing between the law-enforcement and supervisory bodies and the FIU on identified trends and participants of money laundering schemes.
4. In the period of financial instability, cash demand and payments in cash have increased dramatically. To prevent uncontrolled turnover of cash it was recommended to consider the issue of possible improvement of national legislation in terms of cash monetary funds control.
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